Moody’s upgrade reflects government reforms like GST and IBC: Arvind Subramanian

Global rating agency Moody’s on Friday upgraded India’s sovereign bond ratings to Baa2 from Baa3.

Global rating agency Moody’s on Friday upgraded India’s sovereign bond ratings to Baa2 from Baa3. Baa2 is the ninth highest rating in Moody’s long-term corporate obligation rating, which is subject to moderate credit risk.

The upgarde comes as a big positive for the Modi government as the rating agency said improved growth prospects driven by economic and institutional reforms led to the upgrade.

Chief Economic Advisor Arvind Subramanian told CNBC-TV18 said the upgrade has been long overdue and that it reflects structural reforms — like Goods and Services Tax (GST), bank recapitalisation, Insolvency and Bankruptcy Code (IBC), monetary policy committee — that have been implemented.

So far, the rating agencies did not recognise the country’s macroeconomic strength. The government, he added, has raised this point in the economic survey many times that the relative ratings of India and China did not reflect the underlying macroeconomic realities.

On whether this upgarde will fastrack India’s growth,  Subramanian said: “We (government) have an agenda, we have objectives that we have to meet and that will continue the reform programme and the macrostability, objectives will continue and this is welcome, but we are going to be driven a lot by what we have to do internally.”

Piyush Goyal, Minister of Railways and Coal too tweeted on the upgarde.

Sanjeev Sanyal, Principal Economic Advisor echoed CEA’s views and said that rating upgrade to Baa2 is a good news and a recognition of the long series of reform measures that have been done under PM Modi.

Most of these measures are well known to global investors and an endorsement by the rating agency, a step forward and the government will continue to work, move forward with other measures, said Sanyal.

Moody’s upgrade is an acknowledgement of systemic reforms undertaken by the government,  former Finance Secretary, Ashok Lavasa said.

The rating upgrade  will allow the country’s corporates capacity to raise money from the market, help improves the overall perception of the country and the risk associated with investment in India, said Lavasa.

He further said that global perception is changing about the country.

Dr Hasmukh Adhia, Revenue Secretary, Ministry of Finance, Government of India tweeted “The path that Government has chosen for long term reforms and fiscal consolidation is well recognised by investors already. The rating agency too has now confirmed it formally, which is welcome.

HDFC Standard Life Insurance debuts with 8% premium at Rs 313 per share

The share price opened at Rs 313 per share against issue price of Rs 290.

HDFC Standard Life Insurance Company shares listed with 8 percent premium on the National Stock Exchange, driven by positive market conditions and good subscription.

The share price opened at Rs 313 per share against issue price of Rs 290.

At 10:02 hours IST, it was trading at Rs 312.60 per share, up 7.8 percent over issue price and up 0.84 percent over the pre-opening price of Rs 310.

Heads up! HDFC Standard Life to list on bourses with a premium: Experts

This is the third life insurance company getting listed on exchanges, after ICICI Prudential Life and SBI Life.

The public issue of the subsidiary of housing finance major HDFC was oversubscribed 4.90 times during November 7-9, 2017. The price band for the issue was Rs 275-290 per share.

The Rs 8,695-crore public issue comprised sale of 19,12,46,050 equity shares (representing 9.55 percent of paid-up equity capital), by HDFC and up to 10,85,81,768 shares (5.42 percent) holding by Standard Life Mauritius.

At present, HDFC owns 51.69 percent stake in HDFC Standard Life and Standard Life has about 29.35 percent stake.

Govt clarifies Airtel Bank to blame for customers not getting LPG subsidy credit

The Oil Ministry said it has received multiple complaints about non-credit of LPG subsidy amount to their bank accounts.

The Ministry of Petroleum & Natural Gas put the onus on Airtel for confusion over transfer of LPG subsidy in some customers’ accounts. Those who have not received their LPG subsidy are the ones who have accounts with Airtel Payments Bank, the ministry said in a press release.

The ministry said it has received multiple complaints about non-credit of LPG subsidy amount to their bank accounts.

“On verification, it is found that these complaints mainly pertain to those LPG consumers who are Airtel customers and have opened account in Airtel payment bank. Airtel is a telecom service provider which has also ventured into the Payment bank services in recent months,” the release said.

As per the protocol, LPG subsidy is credited to the latest bank account of the beneficiary seeded with Aadhaar cards.

The Ministry and oil marketing companies are already in discussion with the Department of Financial Services, National Payments Corporation of India (NPCI) and Airtel to resolve the issue.

According to the report by The Economic Times, since June 9 this year, more than 23 lakh customers have received subsidy of Rs 47 crore in their Airtel bank accounts, which they did not know had been opened.

According to the report, a state oil company told NPCI that Airtel has been opening accounts without consent of its customers. While opening a Payment account, retail shops representing Airtel have to tick on account opening box and for receiving subsidy. The process was undertaken for those who recently linked Aadhaar with their SIM or who bought new SIM.

I-T searches premises of top NSE officials in co-location case; ex MDs Narain, Ramkrishna on the list

The Income Tax Department is conducting raids at all officials of the National Stock Exchange in relation to the algo trading case.

The Income Tax Department is conducting search operations at the premises of National Stock Exchange officials and brokers whose names figure in the co-location server controversy, sources told.

These officials and brokers included former MDs Ravi Narain and Chitra Ramkrishna, Suphrabhat Lala, and promoter of OPG Securities, Sanjay Gupta.

OPG Securities is at the centre of the ‘co-location controversy’ on the NSE, in which some brokers who had availed of the server co-location facility, got preferential access to the exchange’s trading system. These brokers had somehow managed to connect to the exchange’s back-up server, and hence could access the price feed faster, giving them an advantage over other brokers. It is alleged that the breach happened with the connivance of some NSE officials, though it has not been proved yet.

The National Stock Exchange on Wednesday submitted a forensic audit report on the cash market, currency derivatives, and interest rate futures markets relating to the ongoing co-location case. This forensic report has been prepared by E&Y and the Indian School of Business. Now, SEBI will prepare a future course of action based on the findings of the forensic report.

A few trading members on the NSE are alleged to have made a killing by unfairly gaining faster access to the price feeds, and it is suspected that some employees may have helped them. The case is being investigated by SEBI.

Prepaid virtual debit cards can now be used as e-wallets

Prepaid cards will help fill in the gap while making inter-wallet transactions. It will give users a wider range to use their e-wallet apps.

With digital payments on the rise, the e-wallet firms and banks have joined hands to make digital transactions easier by launching prepaid cards.

IDFC Bank, RBL Bank are among the banks which have launched the concept of prepaid cards. Prepaid cards will help fill in the gap while making inter-wallet transactions. It will give users a wider range to use their e-wallet apps.

Currently, interoperabilty between e-wallets is not allowed. It means that transaction between two different wallets is not allowed. Last month, the Reserve Bank of India, in its new guidelines, said  that wallets will become interoperable soon.

This restriction forces users to use specific e-wallets at shops, cafes and restaurants. For instance, a  Paytm user can not use the Paytm app at a shop that has tie-up with Mobiwik. For a retailer who is in business with Mobiwik, only Mobiwik transactions will be taken into account.

As a first step to remove these hurdles, virtual prepaid debit cards are being introduced.

How will prepaid cards help in bridging the gap?

Prepaid debit cards can only be issued by banks. The concept is similar to that of  Zeta cards — which are issued to employees as incentives and/or benefits. These prepaid card, like the Zeta cards, will run on the Visa or Mastercard platform. The users will need to fill in the card details like card number, CVV, date of expiry, name on the card under the debit card option (here, mastercard) for online payments. After the users have fed in the details, the online payments will be done and the money will be deducted from the e-wallet account.

The e-wallet companies will have to partner with some bank as only the banks can issue these cards.

Zeta has partnered with IDFC Bank for its operations and has now expanded its usage by issuing reimbursement cards, among others.

Along with the employee benefit cards, IDFC Bank has now partnered with Mobiwik to launch their prepaid virtual debit cards. Even though the partnership is with Mobiwik, the virtual debit card can work on every e-wallet platform. The card can be generated on any e-payment platform and can be used like every other debit card.

The prepaid card can be used on e-commerce websites for online payments as well. Amazon, for instance, does not accept direct payments from e-wallets. But if a user has a virtual prepaid debit card, it can be generated on the e-commerce platform and be used for making payments.

The only catch is that the user will be required to have a Mobiwik account to keep refilling their money. The money in Mobiwik will be deducted whenever the user makes transactions. The transactions can be made anywhere where e-wallets are accepted.

RBL Bank has also launched their virtual debit cards. They have partnered with The Mobile Wallet for their operations.

GST rate cut: Here’s what gets cheaper from November 15

The move will be a relief for consumers who might have felt the pinch on their day-to-day shopping.

The GST Council has overhauled the new tax regime reducing the 28 percent tax levied on 178 items to 18 percent or lesser. Most important of them all, the Council decided to slash the GST rate on AC and non-AC restaurants to 5 percent from the current 18 percent slab. The new rates will be applicable effective November 15.

The move will be a big relief for consumers who might have felt the pinch on their day-t0-day shopping. Here are some of the items that will see a lower tax rate.

GST rate cut from 28% to 18%

1) Liquid soaps

2) Cosmetics and deodorants

GST reducing to 17% from 21% on

3) Detergents

4) Razors

5) After-shave products

6) Grooming products

7) Chocolate

GST reduced from 18% to 12%

8) Diabetic food

9) Medicinal grade oxygen

10) Spectacle frames

GST rate cut from 5% to 0

11) Dried vegetables

12) Sweet Potatoes

13) Dried or frozen fish

14) Coconut shell

Govt may revamp Make in India to create more jobs, push GDP growth

The government has identified shortlisted four to five sectors from current 25 sectors. The focus will be on labour-intensive and high-potential sectors which include leather, textiles and garments, automobile.

The government is planning to revamp its ‘Make in India’ initiative and will come up with certain policy changes in important sectors to help fasten the process of creating jobs, according to a report by The Economic Times.

According to the report, the government has identified shortlisted four to five sectors from current 25 sectors. The focus will be on labour-intensive and high-potential sectors which include leather, textiles and garments, automobile.

The NITI Aayog, industry department and heavy industries ministries have been meeting to restructure the policy for the auto industry, which has been identified as a sector with high potential for job creation, the report suggests.

Government’s latest job creation push comes at a time when it is facing severe criticism for failing to create enough jobs as promised during the 2014 election campaign.

Recently, the government also plans to boost employment through the informal economy. Skills Ministry plans to train the ‘barefoot entrepreneurs’ — mainly from the informal sector. These entrepreneurs include people involved in tailoring shops, kirana stores, roadside vendors as well as businesses engaged in providing sundry services.

Government officials said that the ministry will mentor and train these entrepreneurs to join the formal economy and help in generating new jobs.

The government has also launched a number of initiatives to propel job creation.

Startup India

In 2016, the government had initiated the Startup India campaign aimed at promoting bank financing for startup ventures which would boost entrepreneurship and encourage job creation.

The campaign is aimed at promoting entrepreneurship among women and SCs/STs.

The rural version of is called ‘Deen Dayal Upadhyay Swaniyojan Yojana’, which is funded by the rural development ministry’s National Rural Livelihood Mission. While the programme does not guarantee employment, it aims to generate livelihood through self-employment.

Skill India

The Skill India campaign was launched in 2015 to skill youth in order to meet the organisational standards of the industry. The campaign aims to train over 40 crore people in India in different skills by 2022, in a bid to make them employable. Various multinational companies such as Oracle and foreign governments are setting up institutes to train the youth.

Telecom companies will be training further five lakh people over a period of five years under the Digital India programme. The programme also aims at setting up business process outsourcing (BPO) units across north-eastern states and rural areas.

The NITI Aayog has also pitched for creating two coastal employment zones (CEZs) to promote exports and create jobs.

FASTag mandatory for new four-wheelers from Dec 1: What is FASTag and how can you get one?

Apart from toll plazas, FASTags are available in banks which the authorities have signed up with. For a traveller to get the tag, he or she can approach those specific banks.

From the beginning of the next month, it will be mandatory for all new four-wheelers to have FASTag devices fixed on front windscreens by automobile manufacturers or authorised dealers.

FASTag is presently operational at about 370 toll plazas across National Highways. The system is inter-operable and the same FASTag can be used across all toll plazas under the National Electronic Toll Collection (NETC) programme.

What is FASTag?

A FASTag is a device that employs Radio Frequency Identification (RFID) technology for making toll payments directly from the prepaid or savings account linked to it and is affixed on the windscreen of the vehicle and enables the commuter to drive through toll plazas, without stopping for cash transactions.

FASTag has a validity of five years and after purchasing it, one only needs to recharge/top up the FASTag as per the requirement.

According to NHAI, the major advantages of having a FASTag include no need to carry cash for the toll transactions, time-saving, near non-stop movement of vehicles leading to lower fuel cost among others.

From the beginning of the next month, it will be mandatory for all new four-wheelers to have FASTag devices fixed on front windscreens by automobile manufacturers or authorised dealers.

FASTag is presently operational at about 370 toll plazas across National Highways. The system is inter-operable and the same FASTag can be used across all toll plazas under the National Electronic Toll Collection (NETC) programme.

What is FASTag?

A FASTag is a device that employs Radio Frequency Identification (RFID) technology for making toll payments directly from the prepaid or savings account linked to it and is affixed on the windscreen of the vehicle and enables the commuter to drive through toll plazas, without stopping for cash transactions.

FASTag has a validity of five years and after purchasing it, one only needs to recharge/top up the FASTag as per the requirement.

According to NHAI, the major advantages of having a FASTag include no need to carry cash for the toll transactions, time-saving, near non-stop movement of vehicles leading to lower fuel cost among others.

The FASTags can be recharged online through Credit Card / Debit Card /NEFT/ RTGS or Net Banking. The minimum and maximum amount allowed to be recharged is Rs 100 and Rs 1 lakh, respectively.

FASTags are non-transferable and one FASTag can be used only for one vehicle.

How to buy FASTags

A customer can visit any of the Point of Sale (POS) locations at toll plazas/ issuer agency to get FASTag account created. Apart from toll plazas, FASTags are available in banks which the authorities have signed up with. For a traveller to get the tag, he or she can approach those specific banks.

Currently, there are many private and public sector banks which have partnered with the NHAI. HDFC Bank, ICICI Bank, Syndicate Bank, Axis Bank, IDFC Bank and State Bank of India are among them. Among the payments banks, Paytm offers FASTag to its buyers.

A user can also ask the automobile companies to install it on the vehicles.

A customer needs to submit a copy of the following documents along with the application for FASTag:

1. Registration Certificate (RC) of the vehicle

2. Passport size photograph of the vehicle owner

3. KYC documents, i.e., any of these—Driving license, PAN Card, Passport, Voter ID Card or Aadhar Card.

A customer should carry original copies of the documents along with the Photostat.

Govt could ask CPSEs to invest into proposed Rs 1.35 lakh cr recapitalisation bonds

In October this year, the government had announced recapitalistaion package of Rs 2.1 lakh for the banks.

The government could ask cash-rich central public sector enterprises (CPSEs) to invest in the Rs 1.35 lakh crore bonds to recapitalise public banks.

A senior government official told The Economic Times this is just one of the options under consideration by the government.

In October this year, the government had announced recapitalisation package of Rs 2.11 lakh crore for banks. Of the total amount, Rs 1.35 lakh crore is to come from recapitalisation bonds and rest Rs 76,000 crore from budgetary support and stake sale in banks.

In case of recapitalisation, if banks participate then government will issue bonds that the banks will buy. The funds raised by the government will then be infused as capital into the banks.

In case where the banks don’t participate, banks will get cash in lieu of equity, the report said.

According to an earlier report, state-owned Life Insurance Corporation could also be roped into participate in the recapitalisation process.

By the way of process, LIC could increase its holding in the public sector banks. LIC could also participate in a non-operating holding company structure (NOHC) where the government could transfer its holding in various public companies.

This NOHC will then issue recapitalistaion bonds worth Rs 1.35 lakh crore. Nature of these bonds is yet to be decided by the government.

This won’t be the first time when LIC would invest into PSBs. LIC, in the past, has pumped capital in public banks via share allotment and QIPs.

US shouldn’t label India a currency manipulator ‘even if it’s thinking of it,’ says former RBI governor Raghuram Rajan

The comments from Rajan, currently a professor at University of Chicago Booth School of Business, came after the U.S. Treasury said it would be “closely monitoring” India’s foreign exchangeand macroeconomic policies in its latest report on its trading partners’ exchange rate policies.

The US Treasury should not label India a currency manipulator, the country’s former top central banker said on Thursday.

“I don’t suspect the Treasury will do that, but it shouldn’t, even if it’s thinking of it,” Raghuram Rajan, a former governor of the Reserve Bank of India, said on the sidelines of the Barclays Asia Forum.

The comments from Rajan, currently a professor at University of Chicago Booth School of Business, came after the U.S. Treasury said it would be “closely monitoring” India’s foreign exchangeand macroeconomic policies in its latest report on its trading partners’ exchange rate policies.

Although India was not added to the Treasury’s official monitoring list, the country was flagged for the uptick in its net foreign exchange purchases in the first half of 2017. That figure had increased to $42 billion, or 1.8 percent of India’s GDP, according to the report.

The three criteria used by the Treasury to determine “unfair” currency practices are:

A bilateral trade surplus with the U.S. amounting to at least $20 billion
A current account surplus at least 3 percent of the country’s gross domestic product
Net purchases of foreign currency amounting to at least 2 percent of the economy’s GDP over a 12-month period

While India’s trade surplus with the U.S. stood at $23 billion in the year ending in June, it did not meet the other two criteria.

Rajan pointed out that India ran a current account deficit “which could get larger if the price of oil rises.” India’s current account deficit in the quarter ending in June stood at $14.3 billion, or 2.4 percent of its GDP, according to the RBI.

As for the increase in foreign exchange purchases, Rajan explained that India needed its own foreign currency reserves in the event of capital outflows.

“India needs to build reserves in order to protect against outflows. We can’t keep running to the IMF for help as a large country and politically, it’s very difficult … So reserves should be seen as a macro prudential tool,” he said.

Rajan added that it was difficult to label a country a currency manipulator simply on the basis of one metric, especially given how “nobody could accuse India” of holding the rupee’s exchange rate at a “grossly undervalued level.”